German trading and retailing major Metro Group on Monday launched its operations aimed at 'business customers' including small and medium-sized retailers amidst concerns by Bangalore Retailers Combine that it would use this as a backdoor entry into the prohibited retail trading.
The store was inaugurated amidst tight security as a small group of protesters were detained at the APMC yard a hundred metres away. Metro officials said a second store would be started in Bangalore next month, taking the total investment to Rs 176 crore (Rs 1.76 billion) in the two stores, employing 750 people.
Asserting that the firm was not in the retail business, Metro Group chief executive officer Hans-Joachim Koerber told reporters that it was exclusively targeting business customers like small and medium sized retailers, restaurants as well as other businesses.
"By establishing a modern supply chain we also ensure that they are able to get their merchandise at the best prices possible, thereby making them more competitive in their market place," he said.
Asked if the protests were made by the wholesale lobby, Koerber said, "Yes".
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However, Harsh Bahadur, country manager and managing director, Metro Cash and Carry India, sought to allay fears that Metro was in the race to eliminate middlemen, and said it was offering products at low prices due to improved efficiency in its supply chain and through cash and carry method.
Alleging that Metro was misleading the government, traders and consumers, the Bangalore Retailers Combine said the German company was adopting the East India Company strategy to get a foothold in the market.
According to retailers, foreign direct investment rules allow a multinational to carry out only cash and carry wholesale operations in the country and not retail operations.
On allegations that Metro was involved in trade of fruits and vegetables prohibited under Karnataka APMC Act, Bahadur said the FIPB allowed trading of agriculture products and Metro was in discussions with the state and the Centre to resolve the issue shortly.
He said the firm was not in the retail trade and only registered business customers were allowed to purchase goods for their business needs.
Bahadur said, however, there was no restriction on quantity of goods purchased nor the type of goods purchased by any business entity.